Question

The old system of security trading is time consuming.
OR
D'mat system is convenient in globalised scene.
OR
Handling demat share is very time consuming.

• A. True
• B. False

Answer 1

The correct option is A True

This statement is 'True' because of the following reasons:
(i) The system of trading at the stock exchange was a physical transfer of securities.
(ii) It involved a lot of paper work.
(iii) When a person bought shares, he was given a share certificate to prove that he is a share holder of a particular company.
(iv) In the case of transfer of shares, there is no need to fill transfer forms or transfer deeds.
(v) Transmission of shares which takes place due to death, bankruptcy and lunacy of a share holder is facilitated as it is handled by the depository participant rather than following a lengthy correspondence with the company.
(vi) All this involved a lot of time and effort.
(vii) For the above reasons, the old system of security trading is time consuming and hence there is need of depository system of trading in India, which reduces the risk of bad deliveries.